Folks are sometimes surprised to find out that Social Security benefits are taxable, like how salary is taxed as ordinary income at your highest marginal rate. But not all the benefit is taxable: depending on your other income, you may be taxed on as much as 85% of your Social Security benefit, or as little as 0%.
If you and your ex-spouse were married for at least ten years, then you are eligible to claim a spousal benefit based on their work record. Doing so has no impact on the benefit that your ex-spouse ultimately receives, and they might never even know that you’ve made a spousal benefit claim. Just as with married couples, the amount of the spousal benefit can be as high as 50% that your ex-spouse is entitled to at their Full Retirement Age (66 for folks born between 1943 and 1954).
But few people know that you can actually suspend your benefit at Full Retirement Age after you’ve already started collecting!
As the 70 million+ baby boomers approach retirement (10,000 actually turn age 65 every day), they are thinking about two very important retirement benefits – Medicare and Social Security. However, those in domestic partnerships (same-sex as well as opposite-sex) may not be eligible for the same benefits as legally married folks.
After all, for most people, Social Security will be the only source of guaranteed income once they stop working. Yet it turns out that Social Security is one of the more misunderstood tools in a retiree’s toolkit.